Shifting Demand Means Choosing Between Non-GMO and Organic Market Strategies Won’t Come Naturally
Organic has been a food trend for many years, and most food brands have a market strategy perspective on the issue, ranging from actively dismissing organic to embracing it wholeheartedly. Just as the “natural” market starts to settle down, a new popular trend has emerged: Non-GMO.
Although Organic foods are, by necessity, Non-GMO, buying trends suggest that consumers may be on the path to prioritizing Non-GMO offerings over Organic ones. Consumers consider both Non-GMO and Organic to be “Natural” choices, as shown in this chart:
At present, Organic and Non-GMO are basically tied for shelf space and consumer preference, but Non-GMO appears to be the growing trend. Jacob Bunge writes in The Wall Street Journal:
“Last year, foods labeled non-GMO claimed 3.7% of total food sales in U.S. grocery stores, more than the 3.5% for organic items, according to market-research firm Nielsen NV. About 49% of consumers polled by Nielsen called non-GMO an important factor in food-and-beverage shopping, versus 47% for organic.”
Non-GMO foods at retail are currently selling at five times the rate of Organic items, as highlighted in the same Wall Street Journal article:
“Non-GMO sales soared by an average of about 70% annually from 2013 through this year, and are expected to top $13 billion this year. That is five times the rate for food tracked by Spins that bears the organic seal, sales of which total nearly $11 billion for the 52 weeks ended Nov 1. The Spins data don’t include sales from Whole Foods Market Inc., a major seller of both categories.”
If consumer demand increases for Non-GMO over Organic products, brands may be only too happy to meet this demand. Organic certification is highly-regulated and fairly arduous. However, Non-GMO isn’t regulated by the federal government, and certification is conducted by private organizations, such as the Non-GMO Project.
One supplier is certainly seeing growth in demand for Non-GMO ingredients, as written about in Civil Eats:
“Rick Robbins, general manager at Colorado Mills, which processes sunflower oil, sees steadily growing interest in sunflower as a non-GMO alternative. ‘From what we hear, companies are being asked by their customers: are you using non-GMO products?’ He said, ‘Non-GMO is becoming as important as organic.’”
According to Ken Roseboro, Editor, Organic and Non-GMO Report, companies are more aware of past Organic and Non-GMO supply issues that could hamper market growth:
“Both Non-GMO and Organic markets will continue to grow. And we’re starting to see initiatives to ramp up supply of Organic and Non-GMO crops here in the US. There have been shortages, and we’ve had to import a lot of organic corn from Romania and soybeans from India, China and South America. As bigger companies start offering more Non-GMO products, the supply chain will grow and prices for non-GMO raw materials will decrease. For instance, today, only 8% of soybeans grown in the US are Non-GMO, and supply is limited.”
With shifting demand and changing consumer awareness, should brands focus on Organic or Non-GMO brand strategies? Roseboro mentions that Smuckers and Similac are brands increasing their emphasis on Non-GMO and Organic offerings. Let’s take a look at how these brands navigate the complex natural market.
Smucker’s Deploys Natural and Organic Line Extensions
The J.M. Smucker Company, with its Smucker’s and Jif brands, offers both Non-GMO and Organic peanut butters, with an emphasis on Non-GMO “Natural” products. It also has a line of Non-GMO fruit spreads, touted as “Made with Ingredients from Natural Sources.” As you can see, there’s quite an array of choices:
Smucker’s and Jif seem to be headed towards a “Natural” Non-GMO brand strategy, while evaluating the success of the Smucker’s Organic products. Note that the company doesn’t have any Organic Jif or fruit spread offerings.
Similac Pursues a Channel Strategy with Non-GMO and Organic Infant Formula
Abbott Laboratories, top producer of infant formula in the U.S., has offered Similac Organic since 2006. Even though the organic product is already Non-GMO, Abbott started selling Similac Advance Non-GMO in Target stores in May 2015. Abbott general manager Chris Calamari comments in the New York Times:
“‘We listen to moms and dads, and they’ve told us they want a non-G.M.O. option,’ said Chris Calamari, general manager of Abbott’s pediatric nutrition business. ‘We want to make sure we meet the desires of parents…. Over one-third of consumers say it would have appeal to them and give them peace of mind.’”
Similac Organic is priced somewhat higher than Similac Advance Non-GMO. Amazon Subscribe & Save offers the formula varieties for $1.13/oz. and $1.11/oz., respectively. Reviewers also point out that the Non-GMO formula is less expensive if purchased at Target. Besides being a more economical option, Similac Advance Non-GMO is formulated to be more similar to breast milk.
Abbott’s channel strategy shows that the company is responding to increasing demand for Non-GMO offerings, but hasn’t decidedly chosen a side in the Non-GMO vs. Organic debate.
A large, established brand like Smucker’s or Similac can offer both Non-GMO and Organic products, either through increased shelf space or channel strategies. Clearly, with the market still undecided if Non-GMO or Organic will prevail, the best market strategy is to offer both options to consumers. But for smaller brands, offering both might not be feasible. Stores might not provide the shelf space. Or becoming certified for and manufacturing two niche lines could be cost-prohibitive. If you’re a smaller brand, do careful research before choosing your Natural strategy.
